China's factory activity expands at fastest pace in over three years

China's Purchasing Managers' Index rose to 52.1 last month from 51.4 in October as its industrial sector recovers.
China's Purchasing Managers' Index rose to 52.1 last month from 51.4 in October as its industrial sector recovers.PHOTO: AGENCE FRANCE-PRESSE

BEIJING • China's factory activity expanded at the fastest pace in more than three years last month, keeping it on track to be the first major economy to fully recover from the coronavirus crisis.

The official manufacturing Purchasing Managers' Index (PMI) rose to 52.1 last month from 51.4 in October, data from the National Bureau of Statistics showed yesterday.

It was the highest PMI reading since September 2017 and remained above the 50-point mark that separates growth from contraction on a monthly basis.

Analysts had expected it to climb slightly to 51.5.

China's vast industrial sector is steadily returning to the levels of activity seen before the pandemic and tough containment measures paralysed huge swathes of the economy early this year.

But surging infections and fresh lockdowns in many of its key trading partners could dent demand for Chinese exports, which have been surprisingly resilient so far.

The official PMI, which largely focuses on big and state-owned companies, showed the sub-index for new export orders stood at 51.5 last month, improving further from 51 a month earlier.

Economic indicators ranging from trade to producer prices all suggest a further pickup in the industrial sector.

A sub-index for the activity of small firms stood at 50.1 last month, up from October's 49.4.

A strong e-commerce shopping festival in China last month unleashed strong consumer demand, bolstering confidence for small and medium-sized firms.

Analysts at Nomura expect economic growth will quicken to 5.7 per cent in the fourth quarter year on year, from 4.9 per cent in the third quarter.

It is expected to expand around 2 per cent for the full year - the weakest in over three decades, but still much stronger than other major economies that are still struggling to bring their coronavirus outbreaks under control.

China has seen a robust rebound in vehicle sales in particular, fuelled by surging demand for trucks and electric vehicles.

In the service sector, activity expanded for the ninth straight month and at the fastest pace since June 2012, as consumer confidence further improves amid few Covid-19 infections.

Railway and air transport, telecommunications and satellite transmission service and the financial industry were among the best-performing sectors last month.

A sub-index for construction activity stood at 60.5 last month, improving from 59.8 in October.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 01, 2020, with the headline 'China's factory activity expands at fastest pace in over three years'. Print Edition | Subscribe